SEC charges 3 people with insider trading tied to Equifax hack

The Equities and Exchange Commission said on Tuesday that it has accused three people of unlawfully tipping and trading in Equifax Inc securities before the company reported a catastrophic data breach.

Equifax, a provider of consumer credit scores, announced in September 2017 that hackers gained access to the personal information of up to 143 million US consumers between mid-May and July of that year, making it one of the greatest data breaches in US history.

According to the SEC’s lawsuit, Equifax hired a public relations agency in August 2017 to assist with the expected media queries following the breach.

Ann Dishinger, a financial manager at the public relations agency, discovered the Equifax incident through her job and informed her significant other, Lawrence Palmer, about it.

The SEC claims that Palmer then called a former client and arranged for the purchase of out-of-the-money Equifax put options with the understanding that any trading winnings would be divided between the client and Palmer.

Palmer is also accused of tipping his brother and business colleague, Jerrold Palmer, who subsequently contacted a high school buddy and arranged for the purchase of the same series of out-of-the-money Equifax put options.

The brothers, without admitting or denying the allegations, have consented to a judgment that requires them to pay civil penalties. The litigation as to Dishinger remains pending.

According to the SEC, Lawrence Palmer’s former client and Jerrold Palmer’s acquaintance profited around $35,000 and $73,000, respectively. The SEC has charged the brothers and Dishinger with violating anti-fraud regulations.

This is the third set of insider trading charges filed by the SEC relating to the Equifax breach. In 2018, it charged two former Equifax employees – a chief information officer and a software engineering manager.

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